Friday, December 20, 2013

Sharp rise in Vatican's suspicious financial transactions

European evaluators have given the Vatican a mixed report card in its
efforts to comply with international norms to fight money laundering and
terror financing, praising progress over the past year while
highlighting delays and shortcomings at the Holy See's financial
watchdog agency. Chief among them: its failure to inspect the embattled
Vatican bank.

In the progress report released Thursday, the
Council of Europe's Moneyval committee revealed that 105 suspicious
transactions had been flagged to the financial watchdog agency in 2013
as potential cases of money-laundering — a significant increase over
2012 when only a half-dozen were reported. The increase stemmed from the
bank's ongoing process to review all accounts at the Institute for
Religious Works to make sure its customers and assets are clean.

Three
of those cases were forwarded to Vatican prosecutors for investigation,
including one that made headlines earlier this year: the case of the
Vatican accountant, Monsignor Nunzio Scarano, who was arrested by
Italian authorities in June after he allegedly tried to smuggle 20
million euros ($26 million) from Switzerland into Italy without
declaring it at customs.

The Scarano affair prompted the bank's
top two managers to resign and laid bare the lax controls that for years
fueled the bank's reputation as an off-shore tax haven where money
could be laundered. Scarano is also under investigation for alleged
money-laundering in a separate case involving his Vatican bank accounts;
Vatican prosecutors seized 1.98 million euros from his accounts as part
of its own investigation, the report showed.

The Vatican
submitted itself to the Moneyval evaluation process more than three
years ago in a bid to shed its shady reputation and comply with the
requirements of signatories to the 2009 EU Monetary Convention. Since
then, the Vatican has written and rewritten laws criminalizing money
laundering, ratified U.N. anti-crime treaties and created the financial
watchdog agency to supervise its financial activities and work with
other countries in cross-border investigations, among other measures.

Pope
Francis has ramped up the reforms, forming two commissions of inquiry
to try to rationalize the Vatican's opaque and often wasteful finances
and make sure institutes like the bank are serving the church.